Among the different savings plans available in the market, ULIP policies are among the most preferred options. Their popularity among customers is because they offer a comprehensive life insurance cover and the flexibility to build wealth.
Most insurers have also made the process of purchasing a ULIP quite easy. For example, insurers like Tata AIA also offer ULIP returns calculators to help customers purchase the Tata AIA ULIP plan. Using calculators can help you plan your investment. However, if you’ve decided to buy the ULIP plan, you can follow a few simple steps to grow your wealth for the long term.
Long-Term Wealth Building Through ULIPs
Given below are certain tips you can follow to build long-term wealth through ULIPs:
Handle Your Portfolio Risk
As your portfolio grows with time, the risk involved in the portfolio will rise as well. For instance, you may have opted for an investment that offers you the benefit of equity and debt simultaneously.
However, your investment in both asset classes may have a different ratio in a few years. If your debt investment performs better, the portfolio risk is low and vice versa. Therefore, you must monitor your exposure to both asset classes at regular intervals and adjust the portfolio as per your risk profile.
Align Your Investment with Long-Term Goals
You may have a few long-term financial goals like your child’s marriage, education, a trip abroad, etc. These ventures can be quite expensive expenditures. When you align your ULIP policy with these long-term goals, you can plan accordingly and rely on your long-term ULIP returns for achieving these goals.
Switching Funds for Safety
The switching fund option is one of the top benefits of the policy. The primary purpose of this feature is to help you systematically withdraw your funds from a specific asset class and invest it in a suitable fund of your choice.
The feature of switching funds can be quite helpful during the last few years. You must protect the profits you have earned, as the market is unpredictable, and volatility in the market can impact your years of investments. You can use this strategy to reduce your exposure to equity funds and increase your exposure to debt funds. This way, your investment will not be impacted by market fluctuations.
Invest with a Disciplined Mindset
Since ULIPs come with a lock-in period of 5 years, you will get to build a disciplined approach towards saving and investing. However, to reap the benefits from the power of compounding, you must stay invested in your ULIP investment for a long tenure. Therefore, staying invested and keeping up with the premium payments is important to earn suitable returns. In addition, most insurers also offer loyalty bonuses to customers who stay invested for the long term.
Withdrawing systematically works as a reverse of investing systematically. In this strategy, you must withdraw from the fund systematically. It will help you ensure you do not miss out on the current opportunities in the market while lowering your investment risk. If you’re using your ULIP as a way to prepare for your retirement, this strategy will be quite helpful for you.
Investing in ULIPs for the long term can be quite beneficial. First, however, you must follow a few simple tricks to build wealth for the long term. For instance, you can opt to adjust the risk in your portfolio by different features. Along with this, you can also opt for systematic withdrawals to keep benefiting from opportunities in the market.